Invest in Your Own Downtime

 | Feb 26, 2014 | 6:00 PM EST  | Comments
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Stock quotes in this article:

gm

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chk

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bac

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gs

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gs

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amzn

I may be in the minority, but I'm finding very few interesting things to buy so far this year. Trying to capture a quick return is a fool's game today. And patience will likely pay for owners of names such as Chesapeake Energy (CHK), General Motors (GM) and even Bank of America (BAC). 

In the meantime, here are a few things that anyone seriously interested in bettering him or herself as an investor ought to be doing when good stock ideas are scarce. 

1. Read a relevant book or two.

While reading an annual report is a must for any company, a good book can be worth its weight in gold when it comes to better understanding a company. In some cases, a book can be even more useful than an annual report. Want to really understand why Goldman Sachs (GS) is and will remain a dominant investment bank? Read The Partnership by Charles Ellis. Want to know why Amazon.com (AMZN) has been so innovative and incredibly successful at flipping the retail industry upside down? Read Jeff Bezos and the Age of Amazon by Brad Stone. Want to fine-tune your investment skill or learn from a past mistake? Read, or re-read, The Intelligent Investor by Benjamin Graham. 

2. Build your idea list now.

You may find few stocks to buy right now, but that will change. Continue to hunt for good companies. A good business doesn't have to be a good investment today, but it could become one in the near future. Likewise, at the right price, an inferior set of assets can be a far superior investment to higher-quality assets. Do the preparation now, and you will be well prepared to seize the opportunity of tomorrow. Every week, I flip through the Value Line Investment Survey to keep tabs on hundreds of stocks. I go through about seven different magazines a week. I have Google Alerts set for names such as Buffett, Seth Klarman and other investors. Last week, the latest batch of quarterly 13F filings were released by investment managers revealing their quarterly holdings. All of the above are very constructive and profitable uses of your time today, even in the absence of things to buy. 

This juicy market creates a very dangerous trap for stock speculation. It's possible to get lucky and make out handsomely. But the serious money will come to those who sit still and wait for the fat pitch. 

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